How to Know the Price is Right

We as real estate agents spend a lot of time researching properties and comparable sales to determine what we believe the market will bear.  In a market that is dramatically going up and down, this becomes a little bit more art and a little bit less science. Ultimately it starts with the science and math behind the potential transaction.  We look at the comparables and we ask, “What is selling for what price and how fast is it selling?”  And we estimate that the property could sell at ‘X’ price.  Here is where we can use the analogy of fishing.  How do you know that this bait is going to catch the fish that you are looking for?  Bait being price, fish being the buyer.  How do you know that that price is going to attract the buyer you are looking for?  The way that you test the market and test your price theory, because up to this point, your price is just theory (because there is only data to suggest it, there is nothing to confirm it).  The way to confirm and validate the price is to put the house on the market.  The only way to see if the bait you’re using will catch the fish is to put the bait in the water.  If the fish bites, you know you have the right bait.  If the fish doesn’t bite you may have the wrong bait, may have to wait, or may have to modify something.  We are often asked, “What’s the value of our home?”  We can tell you what bait to use, and it’s based on a highly-educated guess.  But until it’s put on the market, we won’t know for sure.  Nobody will.  Even a professional appraisal is simply a professional opinion of someone who is licensed to give their opinion.  So, if you really want to know what your house is worth, we need to put the bait in the water.